Otis is a mischievous, carefree Holstein cow who lives on a farm where, unbeknownst to humans, the animals are anthropomorphic. He prefers having fun with his best friends — Pip the mouse, Freddy the ferret, Peck the rooster, and Pig the pig — rather than following strict rules and accepting responsibility. This annoys his stern adoptive father Ben, the leader of the farm's community. After Otis interrupts a routine morning roll call and meeting with his usual antics, Ben admonishes Otis that he will never find happiness unless he acts more maturely. That same day, Otis meets a widowed pregnant cow named Daisy, who has moved to the farm with her friend Bessy.

That night, the animals throw a wild party in the barn while Ben and Otis guard the fence line. Otis convinces Ben to relieve him; Ben tells him that, the night he found Otis as a calf, the stars appeared to dance. Soon after, Ben is attacked by a pack of coyotes led by Dag. He fends them off but is fatally injured. Otis is alerted and runs outside to his father, who soon dies from his injuries. Early the next morning, the farmer buries Ben's body, and after he leaves, the other animals gather at Ben's grave to mourn.

The animals elect Otis as their new leader, but he shirks his duties by leaving Freddy and Peck in charge of the coop. With the help of three trouble-making Jersey cows, he seeks revenge on a mean-spirited youngster nicknamed "Snotty Boy" for cow tipping Otis, then eludes the police. Later that night, Otis shares a romantic moment with Daisy, who reveals that she and Bessy are the only surviving members of their herd after a flood. Otis comforts her, then witnesses the coyotes chasing a rabbit, and he leaves to seek revenge on them. After engaging them to no avail, Dag recognizes Otis as Ben’s son, taunting him with how he let his father die by leaving his post to frolic. Taking advantage of Otis' lack of strength, Dag proposes a deal: he and his pack will take some of the farm's animals at random times, and if Otis tries to intervene, the coyotes will openly kill them all. Realizing his chances for victory are slim, Otis ultimately decides to leave the farm.

The next morning, before leaving, Otis is informed that the coyotes have kidnapped the hens, including Maddy, a chick who looks up to him. Otis, not having expected the coyotes to arrive until nightfall, sets out to the coyotes' junkyard den to confront them. He gains the upper hand until Dag bites his leg, but luckily many of the barnyard's animals arrive to help him. Dag tries to attack Otis from behind, but he is alerted when Peck, who has struggled with his crow throughout the film, successfully crows a warning. Otis thwarts Dag's attack and warns him to never return to the farm before sending him flying out of the junkyard.

On their way home, Pip informs Otis that Daisy went into labor after he left. The animals steal a biker gang's motorcycles and return to the barnyard in time to welcome Daisy's calf, whom she names "Li'l Ben". Otis takes full responsibility as the new leader of the farm community as he watches the stars in the night sky take the form of himself, Daisy, and Li'l Ben dancing.

In a mid-credits scene, Mrs. Beady, a neighbor who correctly suspects that the animals are anthropomorphic, is getting ready for bed. She is frightened to find that Wild Mike, an animal of unknown species, is hiding in her hair while looking in her mirror.

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